Nan Ya Plastics Corp (1303) Report Interpretation

Overview

This earnings update argues that Nan Ya Plastics' electronic-materials business remains in a strong pricing and mix-upgrade cycle. JPMorgan sees near-term revenue momentum continuing into 4Q and maintains Overweight with a NT$350 December 2027 target price.

Core views

Nan Ya Plastics recorded August electronic-material revenue of NT$18.3bn, up 5% month on month and 82% year on year. JPMorgan says this keeps 3Q electronic-material revenue on track for growth of more than 20% quarter on quarter, slightly ahead of its estimate even if September sales are broadly flat. Management attributed 88% of sequential growth to ASP increases across CCL, copper foil and glass fiber, with the balance from volume. August's slower growth versus July's 15% month-on-month increase is attributed to lower epoxy-resin pricing following an oil-price pullback and already-high utilization exceeding 90% across major product lines, rather than a deterioration in core demand. The report expects another leg of revenue and margin support from recent 20%-25% CCL price hikes for selected customers and production de-bottlenecking through engineering-process optimization. Persistent glass-fiber tightness is central to the 4Q pricing thesis: industry feedback indicates no clear resolution to the glass-cloth shortage through at least 2Q27 because weaving-loom constraints limit capacity expansion. Commodity E-glass prices have more than doubled year to date and rose another 10%-20% into September in China, which JPMorgan estimates raises costs for non-integrated FR4 producers by another 5%-10%. The institution expects CCL producers to pass through this inflation, supporting ASP upside for FR4 CCL, which represents more than 60% of Nan Ya's current CCL shipment mix. With more than 95% self-sufficiency in commodity-grade CCL material supply, Nan Ya is viewed as well positioned to retain incremental margin from upstream price increases. JPMorgan also emphasizes a multi-year product-mix transformation. M7+ shipments are expected to drive the next few quarters as general-server customers migrate from M6 to higher-speed M7+ materials, while AI-grade materials are forecast to rise from less than 5% of CCL revenue in 2025 to more than 50% by 2028. The report notes an unverified claim that Nan Ya has received Nvidia certification for M9+ Q-glass material; if confirmed, this would be a positive catalyst for blended CCL operating margins even after broad industry price increases cease. Supply shortages are also constraining general-server shipments, and exits from related products by Panasonic and ITEQ are cited as potentially supporting Nan Ya's market-share expansion through vertical integration and established downstream customer relationships. The broader group result provides an additional earnings consideration. Consolidated August revenue reached NT$30.6bn, up 46.7% year on year and a 50-month high despite weak BPA sales and soft demand in some products. Management expects sequential EG-revenue improvement from September as the Mailiao line ramps and scheduled maintenance at its US facility concludes. JPMorgan had forecast a 3Q chemicals operating loss of NT$0.7bn, narrower than the NT$1.4bn average loss in 1Q25-1Q26, but now sees strong upside risk to its second-half earnings estimate in a higher oil-price environment. The valuation case rests on structural electronic-material margin improvement. JPMorgan's NT$350 December 2027 target price uses 6x one-year-forward P/B, raised from 5x, to reflect projected ROE above 40% by 2028E; it expects ROE to exceed 30% over the next two years. This compares with Nan Ya's 10-year average P/B of 1.6x and ROE of 9%. The report also characterizes the stock's 10x FY27E P/E as attractive relative to cited CCL, glass-fiber and copper-foil peer multiples of 20x, 25x and 37x, respectively.

Analysis framework

JPMorgan combines monthly company revenue disclosures with product-level price and utilization commentary, industry supply constraints, peer valuation comparisons and forward financial estimates. It links higher CCL ASPs, vertically integrated supply and AI-grade mix expansion to operating-margin and ROE improvement, then applies a forward P/B multiple to derive the target price.

Methodology notes

• Industry AnalysisSupply-demand framework

  Electronic-material supply-demand analysis

  The report assesses tight glass-fiber and upstream-material supply, constrained capacity additions, utilization and customer demand to explain expected CCL price and margin gains.

• Industry AnalysisVolume-price decomposition

  ASP versus volume decomposition

  Management attributed 88% of August sequential electronic-material revenue growth to ASP increases, allowing the report to distinguish pricing momentum from volume growth.

• Valuation methodsPB valuation

  One-year-forward price-to-book valuation

  JPMorgan uses 6x forward P/B for its December 2027 target, tying the multiple to projected record-high ROE from structural margin improvement.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Nan Ya Plastics Corp (1303.TW)

  Primary covered company; expected to benefit from electronic-material ASP increases, supply tightness and AI-grade product-mix improvement.

  Strengths

  More than 95% self-sufficiency in commodity-grade CCL materials, high utilization, vertical integration and an expected M7+/AI-grade shipment ramp.

  Weaknesses

  More than 90% of electronic-material sales were estimated to be commodity-grade and lower margin as of 2025.

  Comparison

  JPMorgan views 10x FY27E P/E as attractive versus cited CCL, glass-fiber and copper-foil peer multiples of 20x, 25x and 37x.

  Risks

  Weaker MEG/BPA demand, slower AI/datacenter capital expenditure, unsuccessful price hikes or next-generation qualifications, and electronic-material market-share loss.

Key data

• August electronic-material revenueNT$18.3bn+5% m/m and +82% y/y
• 3Q electronic-material revenue outlook>20% q/q growthJPMorgan says the segment remains on track, even if September sales are broadly flat
• Sequential growth from ASP increases88%Management attribution for August electronic-material revenue growth
• Recent selected-customer CCL price increase+20%-25%Supports potential upside to September electronic-material revenue
• Consolidated August revenueNT$30.6bn+46.7% y/y and a 50-month high
• AI-grade CCL revenue mix<5% in 2025 to >50% by 2028JPMorgan forecast
• Target valuation6x one-year-forward P/BSupports the NT$350 December 2027 target and reflects projected ROE above 40% by 2028E
• FY27E P/E10xCompared with cited CCL, glass-fiber and copper-foil peers at 20x, 25x and 37x

Impact & implications

JPMorgan argues that sustained electronic-material tightness can lift Nan Ya's CCL pricing and margins while the shift to AI-grade products raises longer-term profitability and ROE. Chemical-segment improvement provides a further possible upside to second-half earnings estimates.

Risks

• Weaker-than-expected MEG/BPA demand due to weak macro conditions or tariffs.
• A deceleration in global AI and datacenter capital expenditure.
• Unsuccessful PCB/substrate price hikes or next-generation electronic-material qualification.
• Loss of electronic-materials market share.